A123 Systems, whose lithium ion batteries could determine the fate of the U.S. auto industry, Friday filed for a $175 million initial public offering.

The Watertown, Massachusetts, company has reeled in $160.9 million in venture capital from investors including North Bridge Venture Partners, which has a $13.6 percent stake,  Qualcomm (8.8 percent) and Motorola (8.5 percent). Gururaj Deshpande, co-founder of Sycamore Networks, has a 12.7 percent stake.

A123, whose technology was spun out of Massachusetts Institute of Technology, is competing to be the battery producer for the Chevy Volt, a plug-in hybrid seen as crucial to the recovery of ailing automaker General Motors. The Volt, scheduled for production in 2010, will use an electric motor and battery designed to go 40 miles between charges and a small gasoline engine to replenish the charge for longer trips.

The competition to develop lithium ion batteries safe and durable enough to put on the highway pits A123 and its battery pack integrating partner Continental Automotive against Compact Power Inc., a Michigan-based unit of LG Chem.

A123 also is supplying batteries to Think Global, the Norwegian electric car maker backed by RockPort Capital Partners and Kleiner Perkins Caufield & Byers, and power-tool maker Black & Decker for their DeWalt product line.

The company has 1,160 full time employees and posted a net loss of $13.9 million on revenue of $8.7 million for the quarter ended March 31. Cash flow was negative $13.5 million in the March quarter and negative $56.1 million in 2007.

Morgan Stanley, Goldman, Sachs, Merrill Lynch, Broadpoint Capital and Lazard Capital are listed as the IPO’s underwriters.

A123 was incorporated in 2001 and was based on battery technology developed in the laboratory of co-founder Yet-Ming Chiang at MIT.